Impact of sourcing flexibility on the outsourcing of services under demand uncertainty

Michel Benaroch, Scott Webster and Burak Kazaz

European Journal of Operational Research, 2012, vol. 219, issue 2, 272-283

Abstract: This paper investigates the relationship between market conditions and the value and use of sourcing flexibility for service processes. We develop and analyze a series of models, and we derive expressions for the optimal switching decision, the value of the option to outsource, the value of the option to backsource, and the probability and timing of switches between the alternative sources.

Keywords: Services outsourcing; Backsourcing; Demand uncertainty; Real options (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:219:y:2012:i:2:p:272-283

DOI: 10.1016/j.ejor.2011.12.007

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